Hedging funds lay out strategies in Japan's tight election, using long and short strategies to seek political dividends.

Jin10 data reported on October 3rd, as the Japanese ruling party leader election is mired in a stalemate, hedge funds are profiting through a series of trading strategies—including plans to sell stocks, betting on a stronger yen, and reducing risk assets. Ahead of the voting on Saturday, polls show that reformist candidate Shinjiro Koizumi and conservative candidate Sanae Takaichi have similar support rates, leading to the emergence of various trading plans. Given the policy differences between the two candidates, the election results could have far-reaching implications for Japan. Hedge funds represented by Epic Partners Investment Co. are prepared to sell high in any potential stock rise once the election results become clear. “My goal is to capture temporary mispricings once the winner is determined,” said Takeshi Uesugi, CEO of the Tokyo-based leveraged fund. “If Takaichi wins, related stocks may experience a celebratory rise, and I will sell at the right time. The same goes for a Koizumi victory.”